Solis Tek Inc. Announces Full Year 2017 Financial Results
CARSON, CA–(Marketwired – April 02, 2018) – Solis Tek Inc. (OTCQB: SLTK), a vertically integrated technology innovator, developer, manufacturer and distributor focused on bringing products and solutions to commercial cannabis growers in legal markets across the U.S., today reported financial results for the year ended December 31, 2017.
Fiscal Year 2017 Highlights
- Revenues of $8.98 million; up 5% over 2016
- Gross profit of $3.15 million; consistent with 2016
- Successfully launched proprietary Digital Lighting Controller from internal R&D engine
- Digital Lighting solution validated as highest in terms of overall efficiency and value for cultivators by independent third-party research
- Launched its Zelda Horticulture Nutrient Line, which uses natural ingredients to help growers increase yield, lower costs and ultimately grow healthier plants
- Raised $2.5 million in new capital to support supply chain fulfillment and nutrient line automation
- Alan Lien appointed Chief Executive Officer
- Tiffany Davis appointed Chief Operating Officer
- Formed cooperative agreement to become Medicine Man Technologies, a leading cannabis cultivation consultant in the USA, recommended supplier of High Intensity Discharge (HID) lighting technologies
- Signed exclusive agreement to distribute Torus Hydro’s pH stabilizer to Solis Tek’s hydroponic customers
“In 2017, we made important strides laying the framework for Solis Tek to capitalize on the broad long-term growth opportunity that lies before us, mostly notably launching our Lighting Controller in the fourth quarter, which represents the latest in a sustained cycle of product innovation, and completing a financing transaction in November that will enable us to ramp our commercialization strategy in 2018,” commented Alan Lien, Solis Tek’s Chief Executive Officer. “We remain confident in the demand trends for our products in both the lighting and nutrient verticals, which will leverage the same distribution-supply channels and client base, driving significant revenue growth and expanded margins.”
Mr. Lien continued, “Throughout 2017, we completed much of the foundation work to establish our nutrient vertical, including completing development of our Terpenez essential oil intensifier, which we expect will start generating increasing revenues in 2018. We are confident that we have the right management team in place to execute on our growth strategy and look forward to further expanding the breadth of our vertical markets across the global cannabis industry supply chain. Solis Tek is focused on maintaining healthy inventory levels of key products, while leveraging its deep industry network to identify new opportunities, such as our March 2018 exclusive agreement under which Solis Tek will distribute Torus Hydro’s pH stabilizer that automatically balances the pH of a hydroponic nutrient feed. We believe that such new partnerships will support continued revenue growth in 2018 and beyond.”
Financial Results for the Year Ended December 31, 2017
For the full year 2017, revenues were $8.98 million, representing a 5% increase over the same period in 2016. These increases were driven by increased market penetration among hydroponic customers and commercial facilities. Cost of revenues increased 7% over 2016, resulting in a gross margin of 35%, compared with 36.4% in 2016.
Selling, general, and administrative expenses were $11.8 million in 2017, up from $3.17 million in 2016, due primarily to stock-based compensation expense of $6.3 million and, to a lesser extent, increased payroll, professional fees, consulting, marketing and other expenses to support our current business objectives.
Research and development expenses in 2017 were $231,700 compared with $370,625 in 2016, representing a decline of 37%, attributable to the timing and scope of R&D projects during the period.
Other net expenses for 2017 were $5.12 million, compared with $117,293 in 2016. The increase was largely attributable to the recording of financing costs and the change in fair value of derivative liability, which did not apply to the 2016 period.
Net loss for the year ended December 31, 2017 was ($14.0) million, or ($0.38) per share, compared with a net loss of ($538,710), or ($0.02) per share for the same period in 2016, as higher gross profit was more than offset by increases in operating expenses and other expenses, mostly from higher stock-based compensation expense, financing costs and changes in fair value of derivative liability.
As of December 31, 2017, the Company had $968,000 in cash, compared with $276,000 at December 31, 2016. The increase was due to financing activity completed in November 2017, which raised $2.5 million, of which $1.64 million came through a secured convertible debenture with a single institutional investor.
To be added to the Solis Tek email distribution list, please email SLTK@kcsa.com with ‘SLTK’ in the subject line.
About Solis Tek
Solis Tek is a vertically integrated technology innovator, developer, manufacturer and distributor focused on bringing products and solutions to commercial cannabis growers in both the medical and recreational space in legal markets across the U.S. For nearly a decade, growers have used Solis Tek’s lighting solutions to increase yield, lower costs and grow better to maximize their return on investment. The Company’s customers include retail stores, distributors and commercial growers in the United States and abroad. For more information, please visit our website, www.solis-tek.com.
Safe Harbor Statement
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are based on the current plans and expectations of management and are subject to a number of uncertainties and risks that could significantly affect the Company’s current plans and expectations, as well as future results of operations and financial condition. The Company undertakes no obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise.
|SOLIS TEK INC.|
|CONSOLIDATED BALANCE SHEETS|
|Accounts Receivable, net of allowance for doubtful accounts and returns of $396,499 and $359,395||417,484||628,691|
|Advances to suppliers – formerly a related party||735,730||-|
|Prepaid expenses and other current assets||134,374||72,531|
|Income tax receivable||-||2,578|
|Total current assets||3,939,994||3,860,387|
|Property and equipment, net||138,243||204,936|
|LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)|
|Accounts payable and accrued expenses||$||1,124,349||$||552,057|
|Due to former related party vendor||381,457||1,083,764|
|Note payable – related parties||1,145,000||265,000|
|Convertible note payable, current portion, net of discount of $1,555,556||194,444||-|
|Due to related parties||146,534||134,086|
|Capital lease obligations, current portion||9,665||13,711|
|Loans payable, current portion||8,476||8,262|
|Total Current Liabilities||3,009,925||2,056,880|
|Capital lease obligations, net of current portion||-||9,665|
|Loans payable, net of current portion||17,481||25,958|
|Convertible note payable, net of current portion, net of discount of $500,000||-||-|
|Notes payable related parties, net of current portion||600,000|
|Series-A Convertible Preferred Shares, net of discount of $351,000, no par value, 351,000 shares issued and outstanding at December 31, 2017|
|Commitments and Contingencies|
|Shareholders’ Equity (Deficit)|
|Preferred stock, no par value, 20,000,000 shares authorized; no shares issued and outstanding at December 31, 2017 and 2016, respectively||-||-|
|Common stock, $0.0001 par value, 100,000,000 shares authorized; 38,522,034 and 29,721,998 shares issued and outstanding at December 31, 2017 and 2016, respectively||3,852||2,972|
|Total Shareholders’ Equity (Deficit)||(6,326,189||)||1,404,891|
|TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)||$||4,116,217||$||4,097,394|
|SOLIS TEK INC.|
|CONSOLIDATED STATEMENTS OF OPERATIONS|
|Years ended December 31,|
|Cost of goods sold (including $3,905,248 and $3,474,012 from a former related party)||5,830,568||5,439,892|
|Selling, general and administrative expenses||11,804,322||3,173,851|
|Research and development||231,770||370,625|
|Total operating expenses||12,036,092||3,544,476|
|Loss from operations||(8,890,820||)||(420,617||)|
|Other income (expenses)|
|Change in fair value of derivative liability||(2,545,918||)||-|
|Interest expense (including $109,863 and $56,626 to related parties)||(224,879||)||(96,470||)|
|Other income (expenses)||23||(25,323||)|
|Total other income (expenses)||(5,123,753||)||(117,293||)|
|Loss before income taxes||(14,014,573||)||(537,910||)|
|Provision for income taxes||7,155||800|
|Deemed dividend to Series-A Preferred Stockholders||(606,948||)||-|
|Net Loss Attributable to Common Stockholders||$||(14,628,676||)||$||(538,710||)|
|BASIC AND DILUTED LOSS PER SHARE||$||(0.38||)||$||(0.02||)|
|WEIGHTED – AVERAGE COMMON SHARES OUTSTANDING BASIC AND DILUTED||37,158,145||29,632,824|
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